Skype Says: Do I Look Pretty?

The online phone service pours on the features as growth goes crazy.

It was an easy decision. I had endured months of telemarketing calls to my office phone before finally cutting the cord. Anybody who mattered called me on my cell phone, anyway. That's why, today, my late-'90s desk phone is a toy. And I mean that literally. My 1-year-old son chews on it, my 3-year-old daughter calls The Little Mermaid on it, and my 6-year-old son has an imaginary line to 911 for the emergency services I apparently need.

Now it seems that Skype wants more of my time. Well, not exactly my time. You see, I'm a Mac user. But version 2.5 of the Web-based phone service, which was rolled out on Wednesday, is being primped to lure the Windows crowd away from nascent alternatives being offered by Google(NASDAQ:GOOG), Microsoft(NASDAQ:MSFT), Yahoo!(NASDAQ:YHOO), and Time Warner's (NYSE:TWX) AOL. (All of them possess instant messaging software that's been upgraded to handle phone calls over the Web.)

BusinessWeek reports that Skype's combat strategy is to get prettier -- that is, to load up on hot new features. Examples include automatic Outlook searches to find registered Skype users and SMS messaging to cell phones. There's also a plan to lure business users through a deal with speakerphone maker Polycom(NASDAQ:PLCM). The two have teamed up to introduce a co-branded speakerphone optimized for Skype calls.

But the really big news is a service called Skypecasts -- conference calling that feels a lot like MySpace. Call it social networking without the thumb cramps . or, maybe, smart business. Here's why: Ever since eBay(NASDAQ:EBAY)paid $2.6 billion to acquire Skype, I've been wondering when the obvious connection between the two would arrive.

Well, helloooooo, Skypecast!

Think about it. Skypecasts are reportedly able to host up to 100 people at a time, and the software will give visual clues when others are beginning to speak, which could keep participants from vocally trampling each other. Such features could also make it relatively simple to set up a podcast.

In fact, some are already available, including one called "Apple Talk" for Mac users. What's to prevent an eBay member from establishing his or her own Skypecast on collectible comics? Or how about a Skypecast on rebuilding 1960s-era Ford Mustangs? Or on anything else that gets sold on eBay, for that matter? Can't you envision an eBay-enabled "place a bid now" button built in your Skypecast interface?

Here's my point: Skype's value is tied to its ability to create network effects. Accordingly, joining eBay's customers with the 100 million-strong Skype user base could unleash huge economies of scale if done correctly. That's why Skype 2.5 is much more than an upgrade; it's a way for eBay to grab hold of more of your network before Google, Microsoft, or any of the others get to it. And that's not just brilliant -- it's beautiful.

High-tech. Biotech. Nanotech. Any tech. David Gardner and his Foolish band of analysts cover it all forMotley Fool Rule Breakers, and they're walloping the market's average return by nearly 17% as of this writing. Find out which stocks are powering the portfolio by asking us for a30-day all-access passto Rule Breakers. All you have to lose is the prospect of richer returns.

Fool contributorTim Beyerswishes Skype would upgrade the Mac version as fast as it has the Windows version. C'mon, fellas! Tim didn't own shares in any of the companies mentioned in this story at the time of publication. You can find out which stocks he owns by checking Tim's Foolprofile. The Motley Fool has an ironcladdisclosure policy.

Author

Tim Beyers first began writing for the Fool in 2003. Today, he's an analyst for Motley Fool Rule Breakers and Motley Fool Supernova. At Fool.com, he covers disruptive ideas in technology and entertainment, though you'll most often find him writing and talking about the business of comics. Find him online at timbeyers.me or send email to tbeyers@fool.com. For more insights, follow Tim on Google+ and Twitter.